Featuring Harry Snyder and Dr. James G. Kahn: The cost of health care is a life and death issue for millions of Americans and the situation is worsening each year. In this podcast we’ll explore why health care costs so much, and how Medicare for All could help.
Host Brenda Gazzar speaks with Harry Snyder, a lecturer at UC Berkeley School of Public Health and long-time consumer advocate, and Dr. James G. Kahn, professor emeritus at UC San Francisco and a health economics expert.
How to make health care more affordable
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Opening MUSIC – “Talk Back” 10 seconds, fade down
Welcome to Code WACK!, your podcast on the state of America’s crumbling healthcare system and how Medicare for All could help. I’m your host Brenda Gazzar.
This time, we’ll talk about why health care is so darn expensive — and whether it would cost more or less if we had Medicare for All. Enjoy the story.
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MUSIC – “Talk Back” 10 seconds, fade down
There’s been a lot of confusing rhetoric around how much Medicare for All would cost us – both overall and individually.
Audio clip from June 27th Democratic Primary Debate:
Senator Bernie Sanders: “People who have health care under Medicare for all will have no premiums, no deductibles, no copayments, no out-of-pocket expenses. Yes, they will pay more in taxes, but less in health care.”
Senator Michael Bennet: “Bernie mentioned that – the taxes we would have to pay. Because of those taxes, Vermont rejected Medicare for all.”
The cost of health care is potentially a life and death issue for millions of Americans and the situation is worsening each year. Here’s how Rep. Pramila Jayapal, who is behind a House Medicare-for-All bill, put it during testimony before the House Budget Committee.
Rep. Pramila Jayapal: “It is actually projected to cost 6 trillion dollars by 2027, the most in the entire world by far, and yet we have 29 million people without insurance . . . . and another 44 million who are underinsured. Almost one-quarter of our country, the richest country in the world, is unable to access health care.”
So would Medicare for All cost more or less than our current healthcare system? We turned to a couple of experts to find out.
Harry Snyder is a lecturer at UC Berkeley School of Public Health and a longtime consumer advocate.
And Dr. James G. Kahn is a health economics expert and professor emeritus at UC San Francisco. Both support Medicare for All.
Mr. Snyder, what is your take on the state of health care in California and the nation today from a consumer advocate standpoint?
Snyder: “It’s not affordable to people. Health care in California is a disaster and most of the insurance industry has been. And there’s a parallel here. The healthcare industry and the auto industry have similarities. You have to buy both. You can’t afford not to have health insurance unless you can’t afford it absolutely or are young and think that you’re going to survive because your youth is going to prevent you from having any serious illness.”
Auto insurance lessons
Mr. Snyder reminded me that auto insurance rates went up so high in California that in 1988, voters approved Prop. 103 – a landmark insurance reform law that introduced rate regulation.
How has that changed things for Californians?
Snyder: “In the last 30 years, auto insurance rates have come down and consumers saved 6 billion dollars a year, approximately 154 billion dollars over the 30 years that this insurance regulatory reform was put in place by California voters. To fight that initiative, the California auto insurance industry predicted that insurers would flee the country, that it wouldn’t work, that consumers would not be able to buy auto insurance and the exact opposite has happened. We saved money because auto insurance rates are now regulated in the state of California and they cannot be excessive. And we now have the second most competitive auto insurance market in the country.”
So what does this have to do with health care?
Some people argue that costs will go up under a Medicare for All-type system. That’s a system whereby every U.S. resident would be covered with comprehensive health insurance. Is that true?
Snyder: “We’re being told costs will go up. They won’t, they will go down…There’s no magic. You have to pay for what you’re getting but if everybody is paying whether they need it or not, just like earthquake insurance, just like auto insurance. You may never need it but you buy it. It’s called insurance. The same thing is true for health. All of those other policies are affordable because everyone is in it. The same will be true for health insurance.
The other falsity that’s going on — particularly in California and also throughout the nation — is that that your taxes will go up. Well, if you pay for your health insurance through your taxes, yes your taxes will go up but your overall costs will go down. And the belief in the health insurance industry is that consumers in California are so dumb that they can’t … figure out that they’re saving money.”
So we’ll pay less overall – and cover everyone?
Snyder: “As a society we will pay less overall. As a state we will pay less overall but some individuals who do not have insurance will have new insurance costs because they are going to be paid for through their taxes. Some who have poor policies because they can’t afford really a decent policy will pay more but they’ll have a decent policy that really provides insurance.
So why not just expand Obamacare to give everyone health insurance?
Snyder: “The Affordable Care Act passed by Obama was a political compromise. It never had any cost containment in it. It relied on private sector to provide insurance. All of the things that were necessary to make it work as it is working in other countries were not included.
Healthcare is not something that the marketplace can offer.”
Why not?
Snyder: “It’s simple. You cannot argue over price and comparison shop when you have a dreaded disease.”
‘It’s magic’
So what’s the best option?
Snyder: “There is no system that is going to please everybody all of the time.
Medicare for all will please more people more often…There is no perfect world and there is no perfect world in health care. Medicare for All is the best of all of the other options.
No policy pays everything you need, except for Medicare, which is working. I have it — it’s magic. I don’t have any limitations on the doctors I can go to. I don’t have any limitation on the services I can get. I don’t have any waits.”
Have you ever argued with an insurance company about whether you’re covered?
My daughter is going through this trying to straighten out her husband’s extraordinary costs for a very dangerous fracture that resulted in an infection that he’s going to have to take medicine for some time to get over. She spent probably 150 hours on the phone and email and skype and zoom talking to insurance companies getting the payment straightened out, and she had great coverage.
Did your daughter succeed in getting the insurance companies to pay for it?
Snyder: “Yeah. It is finally straightened out.”
Glad to hear.
Dr. Kahn, let’s get your perspective. The conventional wisdom is that we have the greatest healthcare system in the world. Yet studies show we spend more and get worse results than everybody else.
Dr. Kahn: “That is correct. We have by far the highest spending among the wealthy Democracies in the OECD, Organization for Economic Cooperation and Development, and we have the worst health statistics, including the shortest lifespan. And moreover, in the last year or two we’ve actually seen a drop in lifespan. That is something that has not been seen for many decades in the other wealthy democracies in the OECD.”
Healthcare sticker shock
In fact, it’s said the American healthcare system is the most expensive in the world. Recent studies show that healthcare is consuming over 17% of our GDP, nearly twice that of any other developed country. In numbers, Americans spent 3.65 trillion dollars on healthcare in 2018.
Why does our healthcare cost so much?
Dr. Kahn: “Well, of course there’s the cost of providing health care. That would be true under any system of paying for healthcare but as a result of the multi-payer system we have some significant added costs. The most important is that we spend a huge amount of money to handle the paperwork, handle the billing. There are quite a long list of tasks, ranging from negotiations between providers and insurers, contracting, keeping track of what’s covered and for how much, getting co-payments from patients, billing insurers, getting approval for certain procedures …and the list goes on and on.
We’ve studied how much this all costs in the aggregate and it’s well over 400 billion dollars a year in the United States. That’s about 12% of all our health care spending goes to extra costs associated with juggling all of these different payers… Another important cost is because we have so many payers, we can’t efficiently decide which drugs to use and negotiate prices for drugs. And so we basically forgo any kind of negotiations for drug prices and that adds another chunk of money in the range of a hundred billion dollars a year in excess costs.”
So of the $3.65 trillion we spend, over $400 billion is wasted on paperwork. Why is the paperwork so expensive?
Dr. Kahn: “About half of that cost is at the insurers. So insurers want to sell their products so they have to do marketing if the insurance is purchased through an agent they have to pay the agent. They have to deal with some pretty complex negotiations with providers. They have to receive billing. They have to review it. They have to decide what to pay. All of that is expensive… In addition, we count in this estimate of the cost of having this complex billing system the profits that the for-profit insurers make. And so they make a lot of money. It varies but 10 to 15% is common.
On the provider’s side, because of the complexity of having to deal with so many different private payers, so many private payers as well as public players there’s a whole part of the doctor’s office or the hospital that is dedicated to managing the billing and insurance-related functions. All of this administrative paperwork to get paid requires people. You have to pay them and of course you have to give them health insurance.”
Thank you Dr. Kahn and Mr. Snyder for sharing your knowledge with us. To recap, in the 1980’s auto insurance rates in California became unaffordable for many, just like health insurance rates are today. Voters passed a regulatory reform bill that effectively brought down the cost of auto insurance, saving Californians billions of dollars over the years.
No one is suggesting we should simply roll back health insurance rates like we did with auto insurance. But experts contend that simplifying our extremely complex and burdensome system by adopting Medicare for All would offer opportunities for significant savings. While every Medicare-for-All plan is unique, switching to a public insurance system would save us billions of dollars while covering everyone in the country, they say. As a result, most people would pay less for healthcare than they are paying now.
Well, that’s it for today’s Code WACK!, a podcast by HEAL California. If you like what you’ve heard, please share, follow, and like us on Twitter and Facebook, subscribe to our email updates at HEAL-ca.org. This is a project of the California One Care Education Fund, and I’m Brenda Gazzar.
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